======================================================================
Note: The electronic version of the following Topic Box is for
      informational purposes only.  The printed version remains
      the official version.
======================================================================



OUTLOOK FOR KEY RESOURCE EXPORTS

Slow economic growth, disinflation in the industrial countries and, in
most cases, ample supplies make a near-term boom in commodity prices
unlikely. This box outlines trends in markets for British Columbia's
key resource exports.


Lumber

Lumber prices have risen sharply since the fall, hitting $475
U.S./thousand board feet in mid-March. These prices are probably
unsustainable since they will cause builders to turn to cheaper
alternative building materials. However, with U.S. housing starts
expected to rise from 1.2 million in 1992 to 1.3 million in 1993 and
constraints on the supply of timber from public lands in Canada and
the U.S., prices should stay well above the 1992 average of $227.


Pulp

Pulp markets firmed slightly in 1992. List prices for northern
bleached softwood kraft pulp rose from below $500 U.S./tonne late in
1991 to $600 in mid-1992. However, the sharp depreciation of
Scandinavian currencies in the fall allowed pulp producers in those
countries to cut their U.S. dollar prices, adding to the pressures
caused by continued over-supply and weak demand growth. Prices have
probably bottomed at around $470/tonne. Over the medium term, they
should move up gradually as demand begins to absorb the net additions
to capacity during the 1989-91 period.


Newsprint

Newsprint prices bottomed in the spring of 1992 at about $425
U.S./tonne and are currently in the $460 range. The five-week B.C.
pulp and paperworkers' strike had little visible impact on pulp or
newsprint prices. Weak advertising spending continued through the
fourth quarter in the U.S., particularly in the key California market.
With 1.1 million tonnes of Canadian capacity shut down over the last
two years, prices should rise to the $600 range as the U.S. economy
and advertising spending pick up. Over the longer term, changes in the
newsprint market caused by recycling pose a major challenge for
Canadian producers.


Metals

Prices of copper and zinc moved up early in 1992, but then fell off
sharply in September due to weaker-than-expected industrial production
in Europe and Japan. Large exports from parts of the former Soviet
Union contributed to weak prices for several metals. With the Japanese
and German economies probably having reached their low points and
growth strengthening in North America, base metals prices should rise
over the next year. However, continued disinflation will hold down
prices of gold and silver, traditional hedges against inflation.


Energy

British Columbia's two key energy exports are natural gas and coal. In
the fall, natural gas prices moved up sharply in the United States as
a result of the destruction of some pipelines by Hurricane Andrew and
expectations of an unusually cold winter in eastern North America.
Over the next few years, environmental considerations will increase
demand for natural gas. Greater access to the U.S. market should also
help to increase B.C. gas exports. A recent survey of gas producers'
forecasts by the Canadian Energy Research Institute shows prices
rising from $1.31 per million cubic feet in 1992 to $1.69 by 1996.

Coal prices have been depressed for many years. This is likely to
continue due to slow growth in world steel production in the near term
and, in the long term, because of the excess supply of coal worldwide.